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Monday, January 5, 2015

Andhra Bank to get capital from govt; no merger threat for now

Andhra Bank has almost got a new lease of life and there is no merger threat for the bank for now. The Government is set to grant a capital of about Rs. 200- 300 crore.

The issue of mergers came up for discussion in the two-day bankers meet held in Pune last week and the view is that no bank is in a position to support another bank in view of the prevailing economic conditions, CVR Rajendran, Chairman and Managing Director of Andhra Bank, told BusinessLine here on Monday.

This, in effect, gives a new lease of life for Andhra Bank, the only public sector bank from Andhra Pradesh.

Last week, BusinessLine reported that the bank was facing threat of merger in view of high non-performing assets from big corporate clients, especially from the infrastructure sector.

It has also been decided that the issue of merger/amalgamation will be board-driven and not be pushed by the Government, said Rajendran, adding that: "In addition to capital from the Govt, we will be raising another Rs. 500 crore next month which should give us about Rs. 800 crore. With the previously-raised Rs. 500 crore tier – I capital, we will be comfortable.’’


The bank with a 5.99 per cent non-performing assets in September 2014, will continue to focus on retail and small and medium enterprises. Once the loan-waiver completes in Andhra Pradesh, it hopes to have agriculture portfolio back in the prime.

"The recovery efforts are also on track and by March, we hope to bring down NPAs drastically,’’ he said. It had set a target earlier to bring NPAs down to 4 per cent by the end of current financial year. In the first two quarters, it had recovered over Rs. 2,200 crore NPAs.

Andhra Bank Officers Union had also expressed its complete cooperation in any recovery efforts being planned by the management.

Source : Thehindubusinessline


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